Fresh copyright conundrum from Dotcom

NEW VENTURE: The jury is still out on whether Kim Dotcom's 'Megakey' will breach copyright. Details on what he proposes remain scant but some internet commentators believe it may violate website owners' intellectual property rights.

OPINION:
Kim Dotcom's new Mega file-sharing service could cannibalise the revenues of other online businesses by substituting advertisements on websites with ads served up by Mega.

The embattled online entrepreneur is expected to unveil file-locker service Mega and sister service Megabox at his Auckland mansion on January 20 - the anniversary of his arrest on copyright and "racketeering" charges.

Megabox will be designed to let musicians and other artists cut out traditional intermediaries such as record labels and instead get paid to provide their wares through his website.

Unfortunately, the way Dotcom appears intent on going about it may not win him many friends.

Internet users could pay to access music and other content, but from the hints Dotcom has dropped it is likely they would more commonly get it for free by agreeing to download a refined version of "Megakey", a controversial application that originally debuted on Megaupload in 2010.

Megakey would replace at least some advertisements on any websites members visited with ads served up by Mega. The prize being eyed by Dotcom is a slice of the US$25 billion (NZ$29.7b) global market for online display advertising.

United States technology commentator Andrew Couts has blogged that while ad-blocking software is not generally regarded as illegal, the status of software that replaces ads with others and effectively diverts revenue from websites may be less clear.

"Based on what we know about Megakey so far, the most obvious legal buttons the software will likely press appear in the realm of - you guessed it - copyright," he says.

"Under copyright law, website owners have exclusive rights to their web property. And that means they alone decide how it looks, including which ads display on their webpages.

"It is because of this copyright that Megabox may violate a website owner's intellectual property rights through the use of Megakey."

Dotcom declined to comment on the ethics and implications of Megakey, saying he was too busy preparing for Mega's January 20 launch.

The editor of Auckland's Aardvark website, Bruce Simpson, forecast trouble ahead in a September blog.

"Until now, Dotcom has played a very clever game, but I fear that with the announcement of Megabox and its ad- jacking option, he's really screwed up."

Ad-blocking software was one thing, Simpson argued. "Leveraging other people's hard work for your own profits - that's probably going to cause you a world of pain."

In defence of Megakey, computer users would need to give permission before it could be installed on their computers.

That is important, says Vikram Kumar, the outgoing chief executive of InternetNZ, though he says he can no longer speak on behalf of the influential society after this week announcing he would quit at the end of the month.

"Transparency is really the key when making those deals with people."

Kumar says he understands Megakey is still several weeks away and there is scant detail yet on how it will work, but he appears uncertain it crosses any lines.

"There is probably a legal angle, a moral angle and a customer angle and they all might differ."

Many internet users seeking free music may not be too concerned if Dotcom cheeses off a few website owners. But a troubling question is what would happen if Megakey proved a legal and commercial success and other websites - major news sites, for example - also started offering access to free content in return for people installing rival ad-substituting software.

The idea of several different ad- serving programs battling it out on users' computers for hegemony seems as bizarre as it would be unappealing.

Megakey does not have the ring of sustainability around it - more the buzz that accompanies a plague of locusts. Fairfax NZ